About the Secretary

Steven Terner Mnuchin was sworn in as the 77th Secretary of the Treasury on February 13, 2017. As Secretary, Mr. Mnuchin is responsible for the U.S. Treasury, whose mission is to maintain a strong economy, foster economic growth, and create job opportunities by promoting the conditions that enable prosperity at home and abroad.

Announcement
includes extending Making Home Affordable; Expanding access to credit by
boosting private label securities market; New partnership to create affordable
rental housing

WASHINGTON – U.S.
Treasury Secretary Jacob J. Lew today announced Obama Administration efforts to
continue helping struggling homeowners avoid foreclosure, increase access to
affordable rental options and expand access to credit for borrowers. In remarks
at the Making Home
Affordable (MHA) Fifth Anniversary Summit, Secretary Lew specifically unveiled
a new financing partnership between the Treasury Department and the Department
of Housing and Urban Development (HUD) aimed at supporting the
Federal Housing Administration’s (FHA) multifamily mortgage risk-sharing
program. In addition, the
Secretary announced an extension of the MHA program for at least one year and a
new effort to help jumpstart the Private Label Securities (PLS)
market. Before speaking at
the Summit, Secretary Lew met with homeowners and housing counselors at the
Greater Washington Urban League, a non-profit organization that provides direct
services and advocacy to more than 65,000 individuals each year.

With the new Treasury-HUD
partnership, the Federal Financing Bank (FFB) will use its authority to finance
FHA-insured mortgages that support the construction and preservation of rental
housing. The first partnership – announced today – with the New York City
Housing Development Corporation will help restore affordable rental housing
damaged by Superstorm Sandy in Far Rockaway, Queens.

“Families and neighborhoods across the country continue to
recover from the financial crisis, and we must not lose our resolve to help
them, even as the economy continues to expand,” said Secretary Lew. “From day
one, the Obama Administration has worked to provide relief to struggling
homeowners and stabilize hard-hit communities. Today’s announcement continues
that effort. These new actions will help provide more affordable options for
renters, assist homeowners facing foreclosure or juggling bills to pay their mortgages
and expand access to credit for prospective borrowers.”

“Families have been especially hard
hit during the rental housing crisis. Demand is soaring and prices are
climbing,” said Carol Galante, Federal Housing Administration Commissioner and
Assistant Secretary for Housing, U.S. Department of Housing and Urban
Development. “To help the many hard working families who cannot find affordable
rental housing, we are partnering with the Treasury Department, to broaden our
efforts to create and preserve safe, decent and affordable rental housing by
allowing more Housing Finance Agencies access to the capital they need to build
or maintain affordable multifamily apartment buildings.”

In addition to the new Treasury-HUD partnership, the
Secretary announced today that the Administration would be extending MHA at
least until December 31, 2016, to allow the Administration to continue
assisting homeowners facing foreclosure and those whose homes are underwater.
To date, the MHA program has provided relief to homeowners
across the country, including more than 1.3 million homeowners who have
permanently modified their mortgages, saving a median of $540 a month in
mortgage payments. The Treasury Department’s housing assistance programs have
also become a model for the broader housing sector, setting a new standard for
the mortgage industry on how to restructure loans and help homeowners. More
than 5 million homeowners have been helped by private lenders who have, in many
cases, used a similar framework to the one created by MHA’s Home Affordable
Modification Program.

Finally, in an effort to help expand access to credit for
qualified prospective homeowners, Secretary Lew announced a new Treasury-led
effort to catalyze the PLS market.

Prior to
the housing crisis, private label securities provided access to credit
for many qualified Americans who did not meet Government Sponsored Enterprises
(GSEs) and FHA eligibility requirements. Securitization
allowed the risks associated with extending mortgage credit to be allocated
among investors with different appetites for taking credit and interest rate
risk.

Since the crisis, Treasury officials have
been working with regulators to put in place reforms that address the flaws in
the securitization and lending practices that played a role in the financial
crisis. Nevertheless, many of the largest investors have not returned to the market, resulting
in very little issuance and few mortgage financing options for borrowers aside
from government-supported channels. To help determine what more can be done to encourage a
well-functioning PLS market, the Treasury Department today is publishing a
Request for Comment in the Federal Register and plans to host a series of
upcoming meetings with investors and securitizers to further explore ways to
increase private lending.

The New Treasury-HUD Partnership

Under the new partnership with HUD, the FFB will provide
financing for multifamily loans insured under FHA’s risk
sharing programs. The new partnership between the Treasury Department and HUD
will help create and preserve more decent rental housing by significantly
reducing the interest rate for affordable multi-family apartment buildings
compared to the cost of tax-exempt bonds under current market conditions.

The New York City Housing
Development Corporation (NYC-HDC) has worked extensively with HUD/FHA Risk
Sharing, Treasury’s New Issue Bond Program, tax-exempt bonds, and other
multifamily housing financing structures. HUD through FHA would provide mortgage
insurance pursuant to a risk sharing agreement with NYC-HDC and the FFB would
fund NYC-HDC mortgage loans for multifamily projects.

The FFB is authorized to fund any
obligation that is fully guaranteed by another Federal agency. The Risk Sharing
program meets this requirement because FFB would purchase certificates or
securities evidencing undivided beneficial ownership interests in 100 percent
HUD/FHA-insured mortgages and HUD/FHA would cover 100% of the outstanding
principal balance plus 100% of accrued interest in the event of a mortgage
claim.